Tax trouble in Troy

| Saturday, February 27, 2010
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The Web site for Troy, Mich., boasts that the Detroit suburb has a AAA bond rating, top-notch public services and, in short, is "the best city to live in Michigan".

Maybe not for long.

Troy, which like many Michigan communities is suffering from plunging property values and looming budget deficits, asked its residents to approve a 1.9 mill property tax increase for the next five years. Voters overwhelmingly said no in an election this week that featured a spirited campaign by the Oakland County Tea Party to defeat the millage.
It's not surprising that Troy's proposed tax hike went down in flames. Fueled by a terrible state economy, voters in Michigan are in an anti-tax fury.

But what I find interesting about the Troy situation is that most homeowners would have seen their overall tax bills decline this year, even if the millage had passed. That's because property values have fallen 14 percent since last year in this once-booming suburb.

City assessor Nino Licari told me the proposed millage increase would have boosted the city portion of the tax bill by 3.4 percent, The remainder, which includes county and school taxes, will fall 9.5 percent this year.

Troy's tax revenue troubles go deeper than the decline in residential property values. The most popular signs on the modern, glass-and-brick office buildings along Big Beaver Rd., the city's main business hub, read "for lease." The sprawling former headquarters of Kmart Corp. stands vacant.

With the defeat of the millage, city officials say they now must cut $6.5 million from this year's budget and face a $22 million revenue shortfall over the next six years.

The city manager has proposed closing the city library, its snazzy community and aquatic center, and the city museum, as well as laying off 47 police officers. The millage-hike opponents say the proposed cutbacks are merely a threat and that the budget gap can be closed by better management of city operations.

Meanwhile, Troy Mayor Louise Schilling has canceled next week's scheduled state of the city address because she's no longer knows what the state of the city is.

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